Betonsports saga nearing the end?

[jetset]

FINAL CHAPTER FOR BETONSPORTS?

Online gambling firm negotiates a guilty plea and plans to liquidate

The Betonsports saga could be nearing an end, according to a report in the UK newspaper The Sunday Telegraph, which quotes company officials as saying that the embattled company could be about to cop a guilty plea bargain with the US Department of Justice, and that liquidation proceedings could be on the books thereafter.

The quid pro quo for the present board of directors would be impunity from further proceedings or personal charges.

Quite where this leaves fired CEO David Carruthers, who still awaits trial after more than 8 months of house arrest in St. Louis, or for that matter the many unpaid players of the group owed money by the Antiguan subsidiary of the company is anyone's guess.

The Telegraph says that the decision to accept a guilty plea bargain to a range of racketeering and wire fraud charges against the company followed advice from the company's American lawyers.

Chairman Clive Parritt apparently told the newspaper that a settlement would prevent any as yet unindicted cases being brought against the board of directors, which includes Lord Glentoran, the Tory shadow minister for Northern Ireland.

Betonsports was one of several online gambling companies plunged into crisis when it was forced by US federal court order to suspend all operations in the American market following the arrest and detention of CEO Carruthers whilst transitting the US. Carruthers was immediately fired and apparently disowned by his fellow directors and remains under house arrest, confined to the environs of St. Louis, Missouri and still awaiting trial.

In March 2007 BoS founder and former executive Gary Kaplan was also arrested after a long manhunt that culminated in his arrest in the Dominican Republic. He, too remains in US custody pending trial.

The BoS directorate has been in sensitive negotiations with the Department of Justice, and although a final settlement document is yet to be received from the DoJ, chairman Parritt appears willing to sign the guilty plea. Later this month, on May 16 a special meeting of creditors and shareholders will be held in the UK, at which it is expected the liquidation of the company will be proposed.

The newspaper quotes Parritt: "We are close to an agreement with the DoJ under which the case against Betonsports will be closed. We will agree the company has been associated with being part of an 'illegal gambling enterprise' between 1992 and 2006 but essentially we are being penalised for buying the company from Kaplan."

Parritt said US customers are still owed money by the main subsidiary, BetonSports Antigua, which is also being wound down.

"This deal will allow the liquidators to deal fairly with the creditors of Betonsports plc, Parrit said. "Without such an agreement the liquidators would have to manage the continuing case in the United States."

Richard Creed, the financial director of the company said: "If there is a way of mitigating circumstances and reducing possible fines through a corporate guilty plea that gets the company off the indictment, then that has to be an option - the financial benefits of pleading guilty will be substantial."

[jetset]

KAPLAN IN COURT

Betonsports founder pleads not guilty to racketeering and other charges

Gary Stephen Kaplan, the founder of besieged Betonsports.com online gambling group who was arrested in Dominica last month on a slew of alleged US crimes and extradited back to America, appeared in court this week.

Kaplan had been sought by the FBI for some eight months (see previous InfoPowa report) following the arrest of the company's CEO, David Carruthers and others triggered a Department of Justice action that has brought the company to its knees. Carruthers, a British subject, remains under house arrest in St. Louis and still awaits trial on charges he has strongly denied.

Reuters reports that Kaplan appeared before Judge Mary Ann Medler of the U.S. District Court and entered a plea of not guilty.

She ordered him to remain in custody pending a May 25 detention hearing that may determine if he can be released on bond.

Kaplan was indicted in June of 2006 by a federal grand jury in Missouri which accused him and 10 others of engaging in racketeering, conspiracy and fraud arising from the operation of Costa Rica-based Internet gambling businesses.

Betonsports, which once traded on the London Stock Exchange, was forced in August 2006 to close down its U.S. business which accounted for 95 percent of its profits. It has since intimated that it is likely to go into liquidation, with its Antiguan subsidiary left to pay off US players.

[jetset]

CARRUTHERS READY TO USE W.T.O. DEFENCE?

Detained former Betonsports CEO comes out fighting

After 10 months under house arrest in St. Louis and with the US Department of Justice charges against him still untested in a court of law, David Carruthers might be expected to be growing impatient with his invidious situation.

Carruthers, then the high profile chief exec of Betonsports.com, was arrested in July last year by US authorities at Fort Worth airport in Texas whilst transitting from the UK to Costa Rica. At the time Betonsports was one of the leading public companies in the online gambling industry, a situation dramatically reversed by the subsequent enforcement activities of the US Department of Justice (see previous InfoPowa reports)

The board of Betonsports disowned Carruthers, firing him from his executive position and leaving him to face charges of racketeering and wire fraud with another nine persons associated with the company. Carruthers raised a million dollar bail, but is still required to remain under house arrest in St. Louis and wear an electronic tag.

Fast forward to May 2007, where Judge Mary Ann Medler of the District Court in St. Louis reportedly informed Carruthers that the recent World Trade Organisation dispute findings against the discriminatory nature of United States online gambling laws may be a defence if pursued.

Carruthers has apparently taken Judge Medler's information on board and reports this week indicate that he is drawing attention to his plight as a British citizen held in a foreign country. Carruthers has contacted unnamed individuals working for former advisers of Betonsports, asking them to lobby the UK government, the European Union and UK and European Members of Parliament on his behalf.

Those he has contacted include people at London brokers Evolution and UK auditing group Baker Tilly, requesting that they write to Charlie McCreevy, the European Commissioner for internal market services and Peter Mandelson, the UK's European Commissioner for external trade. Members of the UK and EU Parliament are also understood to be on his contact list.

In his communication, sent earlier this month, Carruthers reportedly outlines Judge Medler's decision that allows his lawyers to seek outside opinion regarding the recent finding by the World Trade Organisation.

Carruthers accuses the US government of actions that have “destroyed businesses, free competition and lives” in his appeal for help. The letter adds that “now more than ever it is important to get heard” and that it is “critical to communicate and ensure that (the) impact and importance of this WTO decision are not lost to silence and inaction”.

The former CEO says the WTO decision has “extraordinary implications for my life” and adds that the issue “goes beyond my personal circumstances”.

“The US decision to arrest me not only shut down BetonSports, but the actions by the US government have destroyed nearly all the public online gaming companies in the UK. Based on what the WTO has now called a treaty violation, more than US$10 billion in equity of UK-listed companies were wiped away. Three UK listed gaming companies have closed completely and other UK citizens have been arrested as well, victims of a policy that the WTO has now determined as unfair and violates their treaties.”

The appeal from Carruthers follows a week in which the founder of Betonsports, arrested in March in Dominica after an extensive search by US authorities, appeared in briefly in a St. Louis Court. Gary Stephen Kaplan (48) entered a plea of "not guilty" before Judge Medler to a series of charges laid by the Department of Justice that included racketeering

"You understand the nature of the charges? I can't read them all," Medler asked Kaplan of the 20-count indictment. "Yes," Kaplan responded.

Prosecutors claimed London-based BetonSports and Kaplan, along with former CEO David Carruthers and nine other defendants, violated U.S. laws against Internet gambling. The prosecution is demanding the company forfeit $4.5 billion.

Kaplan was remanded in custody to May 28, when a further hearing will determine whether bail can be granted.

And on May 16, Betonsports shareholders will be asked to approve that the company enter a guilty plea after what are reported to be sensitive negotiations with the US Department of Justice. Already crippled in a business sense by an early acquiesence to a US court order to cease accepting American business, the once successful Betonsports in heading for the liquidator, according to statements by its chairman and financial director.

[Paddy]

Well, that bit about the WTO decision and Carruther's defense is very interesting. Can the US hold a British businessman and convict and sentence him based on a law which the WTO has ruled invalid?

If they can't, in theory that means that all the other operators needn't fear being picked up at some foreign airport, or even passing through the US.

[lots0]

An interesting turn of events.

[dominique]

Finally David fights back!

I hope he succeeds.

Grabbing foreign nationals at the airport for doing what is legal in their country and doing so in discord with the WTO and EU should not be possible.

[jetset]

BETONSPORTS FOUNDER TO REMAIN IN CUSTODY

Peripatetic Kaplan has false passports, large amount of foreign cash says federal prosecutor

Hard on the heels of Thursday's guilty plea from the Betonsports online gambling group, its founder appeared in a St. Louis, Missouri district court Friday on a bond hearing.

Gary Stephen Kaplan (48), who faces 22 charges involving racketeering and other allegations was arrested in Dominica in March and extradited to the United States in custody, the St. Louis Post-Despatch reports.

Assistant U.S. Attorney Mike Fagan claimed before Judge Mary Ann Medler that Kaplan was a flight risk who had planned to escape to a country from which he could not be extradited. Fagan said the hardest thing in the Internet age is getting control of cross-border criminals who, like Kaplan, can operate "remote-controlled crime on a huge scale."

Kaplan founded Betonsports, which intends to go into liquidation after it was crippled by US enforcement activities. The British-listed company, which once took in more than $1 billion in bets annually, is out of the firing line following an agreement to cooperate on witnesses and information with the American authorities, but Kaplan, ex-CEO David Carruthers and nine other accuseds still face prosecution.

When federal agents arrested Kaplan in Dominica earlier this year they found that he had a handcuff key and five passports with his picture, some with different names, places of birth or other information in his possession. Kaplan also carried large sums of cash from four countries where extradition is difficult or impossible, Fagan revealed.

A spiral notebook contained details of a plan to win diplomatic protection and asylum in Nicaragua, which would have included a discreet helicopter landing pad, Fagan said.

He also said Kaplan has the ability to move among nations anonymously. Using his U.S. passport, Kaplan traveled to Israel, Venezuela, Colombia, Argentina and Peru in December, the Assistant US Attorney said. Records indicate that he next popped up in Argentina using a Dominican passport, without any record of how he got there from Peru.

After agents searched a Miami address in February and found computer records, Kaplan fled from Argentina to Venezuela using a Peruvian passport. He admitted bribing Venezuelan police and said he was trying to dodge the charges, Fagan said.

Fagan told the court that Kaplan has $107 million in assets outside the U.S. and controls multiple bank accounts.

Warren Hoeffner, Kaplan's father-in-law said that his daughter is buying a house in the St. Louis area and is planning to move there with the couple's two children, and that Kaplan was a devoted family man who would not flee or do anything to harm his relatives. Hoeffner offered to put up his second and third houses in Colorado and Florida, worth about $6.6 million, to guarantee Kaplan's appearance in court.

Kaplan's lawyers have asked Judge Mary Ann Medler for more time to respond to Fagan's allegations. According to the US Attorney website, the next hearing is scheduled for June 4 (Criminal Case Number -- 4:06CR337 CEJ ).

[dominique]

I think there is likely a real case against Kaplan, based on his early dealings as bookie in NY.

If he funded BOS with gains from that, they will likely say the company was based on ill-gotten gains and racketeering and the case could be rooted there.

Going underground sure didn't help... it's never a good decision to go underground.

On the bright side, if that is so, it has nothing to do with David Carruther's case.

[jetset]

KAPLAN STAYS IN JAIL

Bail denied by St. Louis judge

The Evening Standard reports that Betonsports founder Gary Kaplan (see previous InfoPowa reports) has been refused bail by St. Louis Judge Mary Ann Medler. Kaplan faces a number of charges under American racketeering and fraud laws and has been held in custody since his arrest in Dominica in March this year.

Directors of Betonsports admitted a charge of racketeering on behalf of the company last (May) month and undertook to cooperate with US justice officials in ongoing investigations believed to involve Kaplan, former BoS CEO David Carruthers and 10 other co-defendants. None of the accuseds have yet been tried, and Carruthers has been under house arrest in St. Louis for almost a year.

After hearing evidence from both prosecution and defence, Judge Medler said there was a risk Kaplan would flee if freed. "The defendant and his family have no real ties to anywhere or to any community," Medler said.

Kaplan (48) first appeared in court last month on arraignment and pleaded not guilty.

The US Unlawful Internet Gambling Enforcement Act passed in October last year prohibits financial transactions in the US with online gaming companies but lawyers for BetonSports, Carruthers and Kaplan say the law doesn't make the acceptance of US bets illegal.

Following US Department of Justice activity, the once wealthy and industry leading BetonSports.com is insolvent and has filed for liquidation in the UK. The arrest of ex-CEO Carruthers and other DoJ actions, followed by the introduction of the UIGEA caused many top companies to exit the US market and inflicted losses of billions on investors and publicly listed companies.

In more recent times there have been reports that top Gibraltar-based companies Party Gaming.com and 888 Holdings have been in discussions with American law enforcement agencies, presumably seeking amnesty for pre-UIGEA activities in the US market.

[tennis_balls]

I'd start fighting too if I was faced with spending the summer in St. Louis!